US home prices continue to slide

Home prices in the United States fell 3.6 per cent in March from a year earlier, hitting the lowest level since 2003, according to the latest S&P Case-Shiller index.

The report dashes any hope that the housing market is showing signs of a recovery. The drop in the index, which tracks 20 cities, was the largest year over year drop since Nov. 2009.

The drop can be attributed to several factors, including unusually high sales last spring. But there is no way to spin the report into good news for a market struggling to find a bottom.

Prices fell 4.2 per cent in the first quarter after dropping 3.6 in the fourth quarter of 2010.

Foreclosures and distressed property sales continued to drag down prices. In some markets, such as Las Vegas, distressed properties account for more than 30 per cent of sales.

"The risk that housing will resume the vicious cycle seen at the depths of the recession is still present," Aaron Smith, a senior economist at Moody's, told Bloomberg News. "It's hard to be enthusiastic about the economy's prospects as long as house prices are falling."